Idaho Power plays hardball with biogas developer

BOISE, Idaho (AP) — Idaho's renewable energy landscape is strewn with failed projects, but more casualties may soon be added to the list after Idaho Power Co. demanded state regulators cancel the utility's contracts to buy electricity from two proposed dairy manure digesters.

Idaho Power says Boise-based Exergy Development Group's two biogas-to-power projects near Twin Falls have missed or will miss deadlines to deliver electricity to the state's biggest utility, according to filings with the Idaho Public Utilities Commission.

Exergy counters that circumstances beyond its control — in this case, pending rules governing small renewable projects still being hammered out by the IPUC — have scared off its financiers, making such developments impossible.

Among other things, Idaho Power is asking the Idaho Public Utilities Commission for permission to pursue Exergy for undisclosed damages for not delivering electricity when it said it would.

"We're just looking at enforcing the terms of the contract," Brad Bowlin, an Idaho Power spokesman, said Tuesday.

Once one of Idaho's biggest renewable energy developers, Exergy has been beset by bad news for months.

The Boise-based company suspended $323 million in Idaho wind projects in August. It's also embroiled in federal lawsuits, one over wind turbines in Pennsylvania Exergy wanted but didn't pay for, and the other over control of a Minnesota wind farm. Earlier this month, Exergy relinquished ownership claims to the Minnesota project.

Now, its proposed digesters — at the Double B Dairy in Murtaugh and Swager Farms, in Buhl — appear to be in jeopardy.

Just three months ago, Exergy CEO James Carkulis said they were on schedule.

"We will commence construction of two dairy digesters in Twin Falls County later this year," Carkulis said in August, in a statement stressing Exergy's financial health despite a wave of sour news.

On Tuesday, however, Carkulis blamed Idaho Power's efforts to convince the Idaho Public Utilities Commission to tighten its rules on renewable developments for his difficulties finding backers for these latest projects, which would to turn methane gas from cow manure into electricity.

"Idaho Power, by submitting a flurry of legal complaints to the PUC, has made it all but impossible to secure financing for renewable projects, exacerbating the problem," Carkulis said. "These digesters are becoming collateral damage in this campaign against renewable energy in Idaho."

The PUC held contentious hearings over the summer, on issues including whether developers like Exergy or utilities like Idaho Power should own valuable environmental credits generated by renewable projects.

The three-member commission isn't likely to publish its new rules until mid-December.

Idaho Power disputes that Carkulis' financing woes and regulatory uncertainty constitute a so-called "force majeure" — an earthquake, for instance, or civil strife — that should allow Exergy out of its contracts.

"The claimed events do not excuse (Exergy) from meeting the operational requirements," utility lawyers wrote.

At least initially, it will be up to the regulators to decide which side is right, though the dispute could end up in state court.

"The commission will determine whether that really is a valid reason for accepting a delay in the contract," commission spokesman Gene Fadness said of Exergy's claims.